End in sight for net pub closures

After a long period of annual decline, the pub sector is set to return to positive outlet growth within the next five years, the latest MCA data has predicted.

MCA’s Pub Market Report, unveiled at yesterday’s Pub Conference, shows the resurgence of the wet-led model helping to reverse fortunes for the sector but warns this is not a panacea and operators must be alive to other opportunities for growth.

The report shows growth in pub sector turnover this year is set to outpace the wider eating-out market for the first time since 2008. The market is forecast to reach a value of £22.5bn this year, up 1.6%, ahead of the 1.5% expected for the total eating-out market.

Total pub numbers remain in decline with a 1% drop to 46,284 across the country in 2018, driven by a 5.4% drop in the number of tenanted and leased pubs. MCA expects outlet growth to be flat from 2021, and to turn positive from 2023.

The fastest growing pub and bar brands over the past year are all wet-led, tapping into consumer demand for distinctive, premiumsed offerings that are not easily replicated at home.

However, the report highlights that in a value-focussed market pub performance could arguably be stronger. Food-led pubs have faced considerable external pressures but the report stresses that the segment needs to show the same level of innovation and new product development as wet-led brands. Other potential revenue drivers for pubs include the potential for accommodation.

On the picture for net pub closures, the report says that with the end in sight for tenanted conversion and disposal programmes, the underlying growth in managed and independent pubs is likely to drive overall growth.

However it warns: “While overall pub decline is set to end in three years’ time, the market will remain intensely competitive, meaning publicans will need to offer the highest quality drinks and food, tailored to their specific customer base, to succeed. Consumer confidence is expected to remain relatively subdued over the next few years, and competition will be tough for capturing any leisure spend. Pubs will have to keep innovating and optimising revenue sources, from accommodation to food sales to drinks, as complacency will not be an option.”

The 200-page Pub Market Report offers critical insight into the long-term success of the pub sector, by taking a detailed look into its growth drivers and inhibitors. It includes detailed analysis and market sizing, consumer insight, a breakdown of the competitive landscape and focus on leading and emerging brands/operators.

To find out more or to order a copy of the report, please contact enquiries@mca-insight.com